Business & Finance

S&P: Australia Nears Another Record Year of Structured Finance Issues

BusinessWire - July 17th, 2001

Standard & Poor's announced today that Australia is on track to achieve five consecutive years of record structured finance issuance, according to a new report that covers significant rating activity across all segments of the structured finance market, including servicer evaluations, real estate companies, and international activity.

Standard & Poor's assigned public ratings to 16 transactions totaling $10.6 billion in the second quarter of 2001, compared with 11 transactions totaling $6.0 billion in the second quarter of 2000. Half-year volume for the period ended June 30, 2001, equaled 68% of the full year issuance of 2000, which suggests strong growth in volume for full-year 2001 over last year.

All residential mortgage-backed securities (RMBS) rated in the second quarter were prime transactions. Overseas issuance represented more than 70% of the total RMBS issues. The volume of issuance was more than double the issuance in the corresponding quarter in 2000, reflecting the strength and maturity of the Australian RMBS market.

There were two publicly rated commercial mortgage-backed securities (CMBS) transactions in the second quarter, in addition to one in the first quarter. Interest in the sector is growing rapidly and, according to the report, more transactions are expected to come to market before year-end. Standard & Poor's also reported growing interest from several lenders in small-ticket CMBS.

Although the volume of asset-backed securities (ABS) issuance remains relatively small compared with the same time last year, the level and diversity in asset classes and potential future transactions remain strong. This diversity includes loans backed by timber, olives, auto leases, equipment, and synthetic structures. Standard & Poor's believes growth from alternative asset classes in second-half 2001 will continue to strengthen as companies seek off-balance-sheet funding solutions or alternative funding sources.

The asset-backed commercial paper (ABCP) market remained quiet during the period, primarily because of the unusually high activity that occurred during the second half of 2000.